South Africa: SA Reserve Bank Holds Rates, Signals a Cut On the Horizon

analysis

The South African Reserve Bank kept the repo rate, the main lending rate, on hold as expected at 6.75% on Thursday. Two out of five members of the Monetary Policy Committee voted for a cut, and the statement signalled the next move will likely be downward. This is largely because the deplorable state of the economy has put a lid on any demand pressures that could reignite inflation.

The South African Reserve Bank (SARB) kept the repo rate steady at 6.75% on Thursday, but it was close. Three members of the MPC were in favour of no change, while two voted for a cut of 25 basis points. And the next move will almost certainly be south, if the prevailing forecasts on the inflation and growth fronts hold.

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